How Can I Take Advantage of the New Federal Tax Reform?

How Can I Take Advantage of the New Federal Tax Reform?

Posted By J. Roland Jeter, P.C. || 20-Aug-2018

At the end of 2017, Congress passed a major tax bill known as the Tax Cuts
and Jobs Act (TCJA). This new act doesn’t just impact business and
income taxes, but also affects your
estate planning. Under the TCJA, there is a limited opportunity to transfer an unprecedented
amount of wealth free of:

Federal gift taxes

Estate taxes

Generation-skipping transfer (GST) taxes

What Are the New Exemption Levels

As of January 1, 2018, federal gift, estate, and GST exemptions have been
doubled to:

$11,180,000 for a single person

$22,360,000 for a married couple

The amounts listed above contain annual inflationary increases as well.
It is important to note that TCJA provisions related to federal gift,
estate, and GST exemptions will revert back to the 2017 level on January
1, 2026. The exemptions for 2017 include:

$5,490,000 for a single person

$10,980,000 for a married couple

Although the law might undergo significant changes between now and January
1, 2026, you will need to enact planning strategies ahead of the reversion
date if you want to take advantage of these new tax laws. By quickly implementing
a strategy for your estate plan, you can shift out more future appreciation
from your estate. Since exemptions are at historically high levels, assets
that will rapidly appreciate will have a substantial impact on any gifting strategy.

Use Trusts for Gifting

As with all gifting strategies, assets can be gifted outright so that they
are under full control of the beneficiary. However, this also exposes
the beneficiary to potential creditors. An alternative to this issue is
to use a trust.
Trusts provide the following benefits:

Protects the gifted assets from the beneficiary's creditors. This also
includes divorced spouses of beneficiaries.

With a trust, you also have flexibility when determining who will be responsible
for paying income taxes that have been attributed to the assets in a trust.

Review Estate Plans

In light of these new tax changes, all of your existing estate plans and
titles of assets should be reviewed and updated. Many estate plans contain
tax-related terms and formulas that are related to federal estate tax
laws. Because the exemption levels have been significantly expanded under
the TCJA, many estate plans will now be outdated or might result in unintended
consequences. Now is as good of a time as any to review the title of your
assets and all of your beneficiary designations.

Even if you aren’t sure whether the new exemption levels will benefit
you, it is still a good idea to make sure your plan suits the goals you
have for your estate. Important things to consider when reviewing your
estate plan include:

Get Help From Our Estate Planning Attorney

At J. Roland Jeter, P.C., we offer a wide range of estate planning services
that can help you protect your assets and last wishes. For more than 35
years, attorney Roland Jeter has been helping clients in Irving and surrounding
communities with their estate planning needs. Let us get to work for you today.

Attorney Roland Jeter also Serves
as Counsel to McCarthy Law PLC

The information on this website is for general information purposes only.
Nothing on this site should be taken as legal advice for any individual
case or situation. This information is not intended to create, and receipt
or viewing does not constitute, an attorney-client relationship.

Not certified by the Texas Board of Legal Specialization of the State Bar of Texas